Recognizing the Obvious

Who:
What: "Let's ask florists for a credit rating ", The Independent
When: December 7, 2011

If you resent someone stating the obvious, you're probably more intelligent than the general public, which apparently doesn't recognize the obvious.

Here's my question about economic—why should it send countries into panic when the bankers make pronouncements about countries' credit ratings, as they did yesterday? You could choose any layer of society at random and most people would trust them more than bankers, so it would make more sense if the BBC News started, "Private sector growth must be the priority for Europe, said the scouts today, although canoeists and wrestlers disagreed, and there was strong opposition from people with fetishes that involve celery. Robert Peston, what does this mean for the Government's inflation target?"

And banks aren't neutral observers, they're banks If you resent someone stating the obvious, you're probably more intelligent than the general public, which apparently doesn't recognize the obvious. the people who caused the mess. It's like someone who's wet themselves in a public building insisting they choose which mop the librarian fetches to clear up the puddle.

No, really. If you're wondering why anyone needs to tell you this, you've probably figured out what the rest of your neighbors can't seem to figure out for themselves, and God help anyone inclined to explain it to them.

PIMCO Boss on American Debt

Who: Bill Gross
What: "America's debt is not its biggest problem", Washington Post
When: August 10, 2011

Remember, this is from the founder of an investment firm with a trillion-dolar portfolio:

Revenue increases may be part of the solution, but even then, at some imbalanced ratio of spending cuts — such as three or four dollars of spending cuts to one dollar of tax hikes — the thesis assumes that markets and economic growth require what in essence is a fiscally contractionary step, reminiscent of International Monetary Fund policies in emerging markets during past decades. We must, the consensus goes, become like Argentina, Brazil and Mexico from the 1980s: Tighten the budget via spending cuts, reduce the deficit and voilá — economic growth will blossom.

But while our debt crisis is real and promises to grow to Frankenstein proportions in future years, debt is not the disease — it is a symptom. Lack of aggregate demand or, to put it simply, insufficient consumption and investment is the disease. Debt has been simply an abused sovereign and private market antidote to sustain it. We and our global market competitors are and have been experiencing a lack of aggregate demand for several decades. It is now only visibly coming to a head, as the magic elixir of leverage is drained and exhausted. This potentially fatal disease of capitalism is a result of several long-term secular phenomena:

(1) Aging demographics, where boomers everywhere spend less, in contrast to their youth, as they approach retirement; babies, houses and second cars shift to the scrapbook of memories as opposed to future spending power.

(2) Globalization, where 2 billion new competitive workers from Asia and elsewhere take jobs and paychecks from complacent and ill-trained 40-somethings in developed markets.

(3) Technological innovation, where machines and robots displace human labor, resulting in corporate profits but declining wages.

Capitalism and the Discourteous

The nature of capitalism, sometimes referred to as the "natural" economy, or the "law of the jungle", is such that pretty much anybody who intends to carry on in the world must take part in it. That is, even the socialist must accumulate capital in order to distribute it accordingly.

Dietmar Henning reminds us what it looks like when capitalism kills:

Rupert Murdoch: Capitalist

Russ Baker offers a reminder amid the surprised murmurs and horrified gasps:

Rupert Murdoch has had a profound influence on the state of journalism today. It’s a kind of tribute, in some sense, that the general coverage of his current troubles has reflected the detrimental effect of his influence over the years. Right now, the media, by and large, are focusing on tawdry "police blotter" acts of the very sort that have historically informed Murdoch’s own tabloid sensibility, while the bigger picture gets short shrift.

To be sure, the activities and actions of Murdoch’s that dominate the public conversation at the moment are deeply troubling, leaving aside their alleged criminality. Still, what is really pernicious about Murdoch is not his subordinates' reported hacking of phones, payments of hush money, etc., or the possibility that Murdoch may have known about, tolerated, enabled, or even encouraged such acts.

It is, instead, the very essence of the man and his empire, and their long-term impact on our world and our lives.

The Problem With Financial Experts

The problem with financial experts is that, to the one, they have tremendous influence over people's outlooks on wealth security. To the other, they are utterly useless to people who don't have wealth security.

Or, as Mark Steel offers the view from across the Pond:

One of the most touchingly innocent lines of thought you hear is from financial experts when they're giving advice about the need to provide for our pensions, now the state pension is unreliable. "The earlier you start, the better," they say. And: "It's best to top up your contributions to £400 a month."

I never get further than that but I presume they continue: "Because all of us have several hundred pounds spare at the end of each month that we can't think what to do with. Some of us spend it on crack, or buy antique furniture and set fire to it, or have our pets gold-plated or take out a super-injunction but it makes much more sense to put that annoying leftover cash in a pension fund."

Now, in response to the disturbing news that more of us are living longer, selfishly placing an unbearable strain on the nation's finances, the Association of British Insurers has been public spirited enough to find a solution. They suggest "workers should be forced to pay towards the cost of their long-term care in old age", adding "almost two-thirds of adults have given no thought to how they would afford a place at a residential home".

They might not be exactly right, as most people have given it a thought, but the thought has been: "I'm buggered if I know HOW to pay for it, I just hope I keel over in one go". In any case what sort of 23-year-old says: "Ooh no, you go to Glastonbury if you like, but I'm putting that revenue into my care home fund. You might think you're enjoying yourself but you'll regret it in 73 years when I'm the one getting sponged down regular."

And then there are those of us who don't give it a thought because there is no point to it. Winning the lottery, writing a bestseller, or maybe dealing drugs.

Or I could hope for American socialism.

No, seriously though. There are a lot of people in our society who do important, or, at least, gainful work that just won't see the point of putting whatever pittance they have beyond necessity—or, I suppose, whatever pittance they have, period, regardless of whether it meets necessity—toward retirement.

It sort of reminds me of the lectures we used to get from our parents about financial responsibility. Sometimes it seemed as if the calculations about money presumed human beings need no substantial recreation in order to maintain their sanity. Of course, if we all took up meditation, we wouldn't be spending much at all in our recreation.

Maybe that is the key: We should all live like monks in order that we can give that excess income to the financial experts; after all, it's rightly their money, anyway. Right?